Bangladesh Bank approves new bank
Bangladesh Bank yesterday approved one more commercial bank, taking the total number of banks in the country to 61.
The name of the new lender is Citizen Bank. It is the third private bank to get BB approval over the last two years, populating the already-crowded banking landscape. Community Bank Bangladesh and Bengal Commercial Bank are the other two.
Experts say the decision to approve the new bank would create more pressure on the banking sector, given the size of the country's economy.
Talking to The Daily Star, two analysts said the central bank's latest decision has also brought to the fore the question of conflict of interest.
The chairman of Citizen Bank, Toufika Aftab, is the wife of AKM Aftab ul Islam, a director of Bangladesh Bank Board.
"Such an example is not justified on ethical grounds as the central bank directors are those who are mainly responsible for issuing licence to a new bank," said Khondker Ibrahim Khaled, a former BB deputy governor.
He, however, said there was no legal complications in this regard.
Aftab ul Islam said he was aware of the issue of conflict of interest and that was why he left the BB board meeting when the approval was given yesterday.
"There has been no conflict of interest as I was not present during the discussion on the issue at the board meeting," he said.
When her attention was drawn to the matter, Fahmida Khatun, executive director of the Centre for Policy Dialogue (CPD), said conflict of interest was a regular phenomenon in the country's banking sector.
The latest decision is the continuation of existing practices, she said.
The new bank is set to join the others at a time a when the banking and financial sector is riddled with a number of loan scams and bad loans due to a lack of good governance.
Khaled said the existing banks were already struggling to survive amid the current situation over business activities. In addition, new banks seem reluctant to expand their business to rural areas as they mainly focus on urban areas.
This means they have had little impact on the expansion of the county's financial inclusion, he added.
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